The week ahead: April employment report out Friday should show rebound in job growth

With the low 4.1% unemployment rate making it tougher for employers to hire and retain workers, CVS hires hundreds of disabled people annually and has ramped up the hiring amid the tight labor market, with the number of recruits doubling in 2017.
USA TODAY

a megaphone with words we are hiring coming out of it(Photo: Getty Images)

A rebound in job growth is expected when the government releases its April employment report this week. A busy week of economic news also features a Federal Reserve meeting and fresh readings on consumer spending, as well as manufacturing and service-sector activity.

Consumers pulled back on spending early this year after they opened their wallets for the holidays. A big reason was a drop in auto purchases following a surge late last year as Texas and Florida residents replaced cars damaged by hurricanes. Also curtailing consumption were delays in tax refunds and harsh winter weather. But with Americans benefiting from solid job and income growth, economists look for a healthy bounce-back in March. The Commerce Department on Monday is expected to report a 0.4% increase in consumer spending.

On Tuesday, the Institute for Supply Management releases its closely-watched index of manufacturing activity. Amid a strong global economy and rising oil prices that have spurred more drilling, the index has been hovering near the highest levels in more than a decade. At the same time, concerns over growing U.S. trade conflicts with other countries have damped business sentiment recently, notes Nomura economist Lewis Alexander. Economists expect ISM on Tuesday to announce a modest pullback in the index that still reflects a robust expansion in activity.

After raising interest rates by a quarter percentage point in March, the Fed is expected to stand pat at a meeting Wednesday. The biggest question is whether the central bank will lift rates three or four times this year, but that’s not expected to be clarified by a post-meeting statement. The statement will likely note a recent dip in economic activity but also point out that the slowdown should be temporary, Alexander says.

On Thursday, ISM releases its index of service-sector activity. Like the manufacturing measure, it has been elevated, but worries over trade could take some toll, Alexander says. Economists estimate the index will pull back modestly.

Job growth was surprisingly strong at the start of the year, but March brought a significant retreat, with employers adding just 103,000 jobs. Economists largely wrote off the poor performance as a natural pullback after unseasonably warm weather pulled forward hiring to January and February. Even so, monthly job gains have averaged a sturdy 202,000 so far this year. And an upswing is expected: The Labor Department is expected to announce Friday that the economy added a solid 185,000 jobs in April.

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Federal Reserve Chairman Jerome Powell on Friday painted a mostly sunny view of the U.S. economy and said the Fed remains committed to raising its key interest rate gradually. (April 6)
AP